Digging In: Recent Developments on Conflict Minerals

Congo’s mineral wealth continues to play a central role in the country’s conflict dynamics. Despite the upsurge in displacement and atrocities during 2009, multinational companies continue to purchase minerals from the war zone.

Appendix: North and South Kivu mining export data

Data provided by North and South Kivu mining authorities provides a view of the mineral trade in Congo’s conflict zones during the first half of 2009. Given the severe challenges to obtaining comprehensive and reliable data in eastern Congo, these statistics are by no means authoritative, and a close look at these figures raises more questions than it answers. The most recent U.N. Experts report makes explicit this challenge, noting the huge discrepancies between statistics recorded by the mining authorities and actual exports by particular companies. Nonetheless, this information does provide some basis for evaluating the impact of recent events on the trade.

Tin ore exports began 2009 at low levels, especially in South Kivu, which exported only 100,000 kilograms in January. Exports then rose up to more than 500,000 kilograms by May. Although they did fall back below 300,000 kgs in July, statistics for August indicate a rebound. Likewise, in North Kivu, monthly exports have mostly remained within the range of 700,000 to 1,000,000 kgs.

Source: London Metals Exchange.

Source: Division of Mines, North/South Kivu.

What other factors may have influenced the minerals trade during 2009? The most likely factor is the world price of tin as determined by the London Metals Exchange.

The trendlines in the world price, with strong gains in during April and May followed by a dip in June and July, broadly match the pattern of exports reported out of the Kivus. This matches analysis by experts that link trends in the trade in Congo to world price fluctuations.

Insecurity was cited by both the private sector and civil society as also contributing to the slowdown in the trade. The president of the Association of Negociants in South Kivu told Enough that many middlemen had closed their doors as a result of the war, and that important trade routes to minerals mined outside of the conflict zone in northern Katanga and Maniema had been blocked by fighting.

Another important factor cited by comptoirs in North Kivu was tax reforms. Previously as much as 12.5 percent of the value of tin exports according to London Metals Exchange prices wound up going to Kinshasa in tax payments, but this was reduced to 3 to 3.5 percent this year, increasing the incentives for minerals to be exported through legal channels. Nonetheless, we heard from negociants, comptoirs, government officials, and civil society groups that the lack of taxes across the border in Rwanda meant that smuggling minerals into neighboring countries continued, and the U.N. Experts report that “the level of fraudulent mineral exports to neighboring states has escalated significantly since 2008 and particularly since the rapprochement between Kinshasa and Kigali since January 2009.”[20]

Where are Congolese minerals going? Data provided by the Division de Mines for North Kivu provides a snapshot view of what countries and companies received exports from the province.

This information can be misleading because most of these companies are metals traders, rather than the smelters and processors that are the actual destinations for the minerals. However, the data underlines the continued importance of Belgian metals traders and smelters and processors in Asia to the Congolese trade. Of particular note are the shipments to smelters Thailand Smelting and Refining (Thaisarco), which announced it would suspend purchasing only a few weeks later. Comptoirs Sodeem, Hill Side, and Pan African Business Group were all identified by the U.N. Experts as sourcing from Bisie mine in Walikale. The Coltan supplied by MH1 to African Ventures was also noted by the U.N. Experts Group as sourced from a militarized mine operated by former CNDP elements in Masisi, North Kivu. African Ventures supplied this coltan to Refractory Metals and Mining according to the U.N. report.

The South Kivu Division of Mines informed Enough that the number of comptoirs actively exporting minerals declined significantly during the Summer 2009, with only 4 of 16 registered comptoirs operating at full capacity. Three of the five comptoirs cited by the U.N. Group of Experts as selling minerals from FDLR-controlled mines to international companies were operational and exporting during this period.

It is important to note that because U.N. investigations named particular companies rather than individuals, it is possible that some of these companies may have suspended operations in an effort to avoid being targeted for sanctions. In fact, the U.N. Experts report that Bukavu-based comptoir MDM, which announced it had suspended operations, was in fact continuing to trade in minerals from FDLR mines under the name of WMC, another comptoir also cited by the Group of Experts.